Research On The Design And Implementation Effectiveness Of Equity Incentive Of Shanghai Jahwa

Equity incentives,also known as option incentives,are one of the most common ways for companies to motivate employees.This system gives employees a certain number of company shares conditionally,in order to coordinate the interests of the owners and managers of the company so that the company will go forward in the long run.However,as far as China is concerned,the equity incentive system is still in its infancy.Although the enterprises that implement equity incentives are springing up,there are some problems and risks in the implementation process.What is the motivation for the design of equity incentives for listed companies? Is it really effective to implement equity incentives? How to determine the effectiveness of equity incentives? This paper solves the above problems by conducting a case study of Shanghai Jahwa corporation with “control transfer” as the entry point.Taking the Shanghai Jahwa of which the property has been changed from state-owned to private as the research object,the paper analyzes the effectiveness of the system of two sets of equity incentives implemented before and after the transfer of control rights from the three angles of financial performance,market response and the retention of incentive objects,respectively.Through the research,it is found that: in the first set of incentive scheme design,it is difficult for management to seek personal welfare through equity incentive,and the equity incentive scheme formed under this background is the product of the trade-off between management and major shareholders.The design of this equity incentive system is more reasonable,and the motive of design shows a relatively strong incentive,the program's assessment indicators and incentives can testify to this point of view;from the effect ofimplementation,the company's financial performance and market response have been significantly improved.In the second set of program design stage,the company experienced the "Big Shake-up" of the management structure,the incoming general manager was appointed by the major shareholders directly.At this time,the major shareholders have a higher control over the board of directors,the designers of equity incentives will usually express the will of the major shareholders.As a result,they might conspire together to do harm to the interests of the company.At this point,it seems that the equity incentive design is not reasonable enough,the motivation of its design is seeking the welfare of management,the incentive effect is weakened.Based on these consequences,the paper brings up with some suggestions on how to implement the equity incentive system better.